The Flat World

I have read The World Is Flat Book and I agree it is both tedious and an eye opener. But I also think it is overstated. I remember the 80's when the "experts" thought Japan was going to eat out lunch but it turned out they had some fundamental flaws in their economic system too. So because of these flaws along with increased competition from the rest of the world and better productivity in the USA it turned out that Japan didn't take over the economic world and it doesn't look like they will. China also has its own flaws which will limit it as well. But that doesn't mean we should be complacent. We should take this challenge as we did Japan's challenge as a wake up call, get our complacent butts in gear and get moving. A much greater emphasis in our educational system and the types and quality of graduates we put out would be a great place to start.

Well it's a little like surfing isn't it? You have to stay ahead of the wave, not behind it. You either lead, or get out of the way. If you truly believe that our future belongs in manufacturing transportation devices using a carbon based fuel source or software written to a proprietary code, then we are truly finished. Look at where our society is going and adapt. Our future lies in the development of environmental technology that will allow our children to have the same or better standard of living that we now enjoy. In fact, many of us will not have the standard of living that our retired parents are now enjoying. Is our standard of living already falling?

I think our standard of living in the US probably has fallen, in general. When I was a kid in the 50's and 60's it was very unusual to have two parents working. Now it's the norm. It was pretty well accepted that if you did a good job, you'd continue to work for the same corporation, probably for your entire working career. Now, no one would dream of such a thing.

On the other hand, there seem to be more people with net worth of $3,000,000 on up (even adjusted for inflation). Most large cities seem to have large pockets of McMansions. I'd guess the top 10% will increasingly do very well, and that the standard of living for everyone else will gradually fall.

I was involved in a project for a large auto company in the 80's. I designed a system to train all the employees of a new electronics plant in Mexico. They would build (at $0.50/hr) the same radios and clocks being built in Pennsylvania (12.50/hr) and Brazil (2.50/hr). The people in PA were none too happy to see me come in to study their plant. But then, neither were the people in Brazil, where the plant was relatively new. I could envision both the US plant and the Brazilian plant drying up as production went to places with lower labor costs. But, while visiting the Brazilian plant, I could hardly help but think: "Isn't this a good thing? These are great jobs for Brazil, giving these workers a much improved standard of living, health benefits, etc. The same benefits will come to the workers of Mexico. BUT at the expense of workers in Brazil and PA." I real mixed bag.

Although the motive of the corporation was simply to get the parts produced at the lowest cost, there was a strong benefit for the PA workers in the 60's, the Brazilian workers in the seventies and early eighties, and the Mexican workers in the late 80's and 90's.

Although it's imaginative and optimistic to think that the PA workers are now writing software and making a killing at it, that is not likely the case. By definition, half of the population is sub normal in the logic aptitude required for programming, just as half the population is sub normal in the kind of thinking and body coordination to do well in sports. When I was a kid, average Joes could support a family. Now, that is rarely the case, and in the future, it is even less likely.

If we, in America, increasingly move toward jobs requiring high intelligence, lots of education, and creativity, but at the same time are doing worse in the one aspect (education) that we can control, then what are average Joes going to be doing in 2020?

Dear sir:

Would you please tell me your city you live and where did you buy the press? thanks

henryzhang1@hotmail.com

Gee! it is amazing what you can do with a little scrap steel (for which I get 4 cents a pound for at the local junk yard, not 1$) and slave labor isn't it?

Slave labor:

This relates to my post re working in Brazil and Mexico. The $.50/hr that the corporation would be paying for labor in Mexico was a very competitive rate -- people were tripping over themselves to apply for jobs. My client could not simply refuse to go where labor is cheap, because they'd be shortchanging shareholders. What's the corporation to do? What's the worker in PA to do?

Some of the iron in your hydraulic press came from US scrap, but a lot of it came from China's own iron deposits. I have obtained a favorable price quotation for a synthetic chemical of mineral origin from a Chinese chemical company. If the Chinese are willing to strip their resources and send them around the globe, let's buy them and conserve our own. The same goes for oil. I may buy a Hummer and do my part to use up middle eastern oil. Once it is gone, they can go back to herding goats. Alternatives do exist, and only low oil prices are holding them back. The worst thing that could happen to the developed world -- in the short term -- would be an intelligent and forward looking leadership in the middle east. The mid-east's best interest would be served by exporting less crude (i.e., raise the price) and investing in processing plants to sell those hydrocarbons in a higher value-added form, and in the long haul, we might all be better off. Will their leadeship continue to behave greedy, short-sighted and stupid, while blaming the developed world for the poverty of their citizens?

I don't claim to know much about finance. I do know that out here in the hinterland, liquidation of capital to finance current consumption is called "eating the seed corn". The professional economist calls it Balance of Trade Deficit. Economics is not rocket science, and we in the US can expect to be working harder for less real reward. The best that energetic and creative leadeship has been able to come up with to trump economic reality is war and carnage. I'd actually prefer hard work.

On the bright side, when the American middle class is working for the same wage as the high tech middle class in Shanghai (currently, about $1.56/hr), we will once again have rising -- rather than falling -- expectations.

Our economy has frequently shown in my lifetime (the past 31 years) that we do not sit still and stay productive. My dad grew up working in textiles and oddly enough he still does. It is a much more challenging market, but there are places that American manufacturers can compete. Similarly, the first assembly line for automobiles was produced in America. Computer programming gained its major foothold in the world due to work done in America. I don't think that we can compete in every market for ever and beat everyone, but our social and business society has shown a great deal of adapability in our ability to improve on ideas or just come up with new ideas. Then once we have carried them to the point that the labor costs become the major factor in preventing growth in that market, other countries become much more competitive. My experience in dealing with low cost countries such as China and India is that they are good at reproducing products rather than innovating. Such low cost countries frequently rely on knowledge from the country the technology originated in. There will come a day when that will change, but then their standard of living and cost of labor will be much closer to ours (i.e. what has happened in Japan since the 50's).

As for the cost of base materials in China being cheaper than here, just do a quick news story search. I can remember hearing at least 3 or more instances in the past few months where there are tremendous health issues for villages around the various smelters and chemical facilities in China. Our businesses have to adhere to much stricter standards for environmental friendliness than those in China. Not to mention that most corporations in China are at least a majority if not completely state controlled. So the state sets the rules, sets the regulations, and reaps the majority of profits. Hmmmm. Sounds like a conflict of interest. Over here in the States, we say our goevernment officials should recuse themselves from any DISCUSSION that could affect a company in which they have ANY shares. Now don't get me wrong, I like clean air and water and would prefer that my Senators not receive money for thier votes on issues, but low cost countries have a different standard that they are trying to meet and it tends to be a cheaper (in terms of dollars) standard to reach.

Then there is the issue of the level of quality from these areas. Some companies in these countries can output excellent quality. But some are really just bad copycats with no real knowledge of what they are doing or why. So you have to be very careful in choosing your low cost supplier. From personal experience, when a foundry quotes your cast parts extremely cheap and then waits another two weeks before asking for the material standard that you require on the drawing because they don't know what that material really is .... go shopping elsewhere. Otherwise you will end up doing alot of homework for them. If management asks, say there was an earthquake and the foundry fell into the resulting crevice.

Well, I guess that's my 2 cents worth. (It would be worth even less if I was in another country).

i,m from australia,it was allmost a year ago that i spent 4 months in china, my 6 th trip in 7 years, i,m a designer , architectural, furniture mainly, ive been trying to set up operations in china manucfacturing furniture, will be back there next september, maybe before.this last trip i finaly was able to cope with china , every other time i have been open mouthed at the size and rate of the expansion,why go to china to set up manufacturing? i love australia, as a japenses guy said to me in a hotel lift , australia great place for holiday , china good for bussiness,i wont go into our industrial regulations, conpliance costs, labour costs, shortage of willing workers, ( our social security system is very good)taxes and general on costs,but our furniture industry is a shadow of what it used to be , now its more imports.

Did i mention that you cant see the sky in china? and its hard to breath,and the rivers are far from pollution free?

I,m not well educatered, spelling not good,and i dont understand ecomonics

but,

if you sell raw materials ,them buy them back value added,and you are producing less and comsuming more and your balance of payment starts tip the wrong way ,who has the money in the end?

If you are relaxed and enjoying the wonderful, country you live in, ie america, australia , as we lobby for increased quality of life, better food, better enviroment, better laws, more equilaity ,more play time, more things to play with,and your desire for self improvment, education is not so pressing, who pays for it?

our goverment keeps talking about a level playing field, for export and imports, "we must open up our markets for imports, make it fair for developing countries," ???

Yea, we have nothing to worry about from developing countries, after all we are superior (i,m white anglo saxon,what do i have to worry about,its my right to be right)

Oh well its the start of summer here,the beach is looking good, i have put on a little weight over winter,, i must have eaten too much, was a bit lazy, maybe i will have to go to the gym to work off the extra fat. ??????, no thats silly why should i work off the extra fat surley there is something i could buy to solve that problem???

China is an amazing place and the people are happy and optomistic, i have been to america many times and i love it too,

...very interesting observation! y'know, given all the shortcomings(high cost/questionable level of training/competency,etc-real or imagined!) of the ameican labour, amazingly, it's still The most productive nation in the world! forget about japan or germany or anyone else.

I definitely agree with Nate, on America's knack to bounce back. Look, the whole world is doing business in dollars when the dollar has nothing to back it up! I don't know if this was engineered, but somehow, the whole world has to make sure that the american economy floats. It's a rather strange phenomenon, the whole nation is pretty much running on credit, no reserves at all! Y'see this is a nation which is technically broke, but then, you have individual(s)/groups who have or control so much money, enough to shake some countries-regions even, to its roots! Now folks, that's america and what its citizens can do- at least for now, its a passport that packs quite a punch! Will this change?

Well, China has 1 Trillion dollars in foreign reserve! She has the money and knows what to do with it too. She's buying up africa and all its resources like it costs nothing. Along the way, politically speaking, she also gains incredible captive markets for her produce/products. Africa is beginning to see the Godfather in China! The grand benefactor! Amount of oil she buys - next to Japan!, for storage only.

An episode in Trump's(his book) comes to mind. When he was broke by 900 million, banks were still willing to talk to him.Point here is, when you hit a certain threshold level(leverage point), you gain recognition/power/leverage/general acceptance - even when there is no cash at the point of transaction. Can you or I do this !? Now, money is making money for China, even if the people go down the drain(in any number of ways!)-it won't matter.

Japan breathed a lot of economic fire-not much more.China is different.You have american company digging their biggest gold mine.China has coal reserves that could easily last the next 200 years. In a situation such as this, you can have only one king-and they have it(central committee).

..I'm sure America and her new comers will think of something....